Weak demand intensifies pressure in mature submarkets

• Leasing demand remained weak, with only one lease exceeding 100,000 sqm in Pinggu. Leasing slowed in mature submarkets, with cost optimisation remaining a top priority for tenants.
• Spillover from mature submarkets continued. Tenants in cost-sensitive sectors with large-space requirements, such as automotive and F&B, accelerated their relocations from core submarkets to emerging areas like Pinggu.

New supply increases in Q1 2026

• One new project was officially completed in Q1 2026, adding approximately 350,000 sqm of warehouse space. The supply was concentrated entirely in the Pinggu submarket, contributing significantly to the citywide vacancy rising to 33.9%.
• Although total new supply over the next three years remains largely unchanged, delivery delays driven by subdued market sentiment and heightened pre-leasing hurdles may temporarily ease near-term supply-side constraints.

Rent declines accelerate

• Average rents continued their downward trend in Q1 2026, declining 5.8% q-o-q and 19.0% y-o-y. The Pinggu submarket recorded the steepest decline.
• Overall yield softened modestly by 5 bps q-o-q, reflecting continued subdued investor appetite for logistics assets in Beijing.

Outlook: Cost-saving relocations trend likely to continue

• Rents are expected to remain under downward pressure until vacancy rates show meaningful improvement; meanwhile, Pinggu is emerging as a preferred destination for spillover demand from traditional submarkets, leveraging its cost advantage.
• From a capital markets perspective, the yield decompression trend is expected to continue.